SPOTLIGHT • INDONESIA
GAME CHANGER: Trade has surged since the China-ASEAN free trade agreement
try are doing better than ever before,
others certainly have cause for concern. Te agreement triggered a surge in
trade, but also a big increase in Indone- sia’s trade deficit with China. Accord- ing to the Indonesian Trade Ministry, revenue from non-oil and gas exports to China reached US$14.1 billion in 2010 – up 58% from 2009. However, non-oil and gas imports from China rose to US$19.7 billion, creating a US$5.6 billion trade deficit, US$1 billion more than in 2009.
Uncomfortable clothing
Te textile industry shows an even greater imbalance. According to API, Indonesia exported US$180 million in textile and textile products to China in 2009, com- pared to a whopping US$1 billion in im- ports from China. After CAFTA came into effect, Indonesian textile exports to China rose to US$300 million in 2010 – a 67% increase over the previous year – but imports spiked to nearly US$1.7 billion. Te US$1.4 billion deficit repre- sented a 61% rise from the previous year. “Te industry of woven fabrics and
knits is not faring well at all in Indone- sia because of the flood of goods from China,” said Sudrajat, who is now chair- man of API. “Some factories have closed down because they cannot compete with
40 China Economic Review • May 2011
Chinese fabrics … In the last three years, many people haven’t replaced machin- ery in factories here because they are so hopeless they [can] compete with Chi- nese manufacturers.” In 2009, China’s textile and garment
exports fell by about 10% year-on-year as demand declined sharply, the renminbi appreciated against the dollar and labor and production costs perversely contin- ued to rise. Te slowdown alarmed Bei- jing to such an extent that it enacted a series of measures to keep the sector afloat, approving tax credits and rebates and forcing banks to give factory owners low-interest loans. Te measures were effective, and the
country’s garment manufacturing sec- tor enjoyed remarkable growth in 2010, helping the Chinese textile industry post
Exporting growth
China textile exports to Indonesia, 2006-2010 2,500
2,000 1,500 1,000 500 0
an all-time high for export volume at US$226 billion – a 23% increase from 2009, according to the China National Textile and Apparel Council. Garment exports to the US and Europe rose by 27% and 24%, respectively, while exports to ASEAN countries climbed by 36%.
Looking south
Te experience caused Beijing to take another look at Southeast Asia and con- clude that emerging markets like Indo- nesia could prove key to protecting the industry in the future, both as outsourc- ing destinations and sources of consumer demand. China exports mostly finished gar-
2006 2007 2008 Source: China General Administration of Customs 2009 2010
ments to the US, Japan and Europe and raw materials and semi-finished products to Southeast Asia, meaning Southeast Asian firms are both competitors and partners with Chinese producers. With the treaty now in place, some Chinese manufacturers are also increasingly look- ing at moving their factories to Southeast Asia, and in particular Indonesia, where wages are lower, raw materials are widely available and the political situation is relatively stable. According to a report in Indonesia Finance Today published in February this year, 15 Chinese textile companies have already reserved 200
US$ million
Imaginechina
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68